Worker Co-ops in Illinois and Their Future

Jacqueline Hannah has been a manager and organizer in the US cooperative movement for 12 years, merging her passion for local just economies with her desire to empower individuals and communities to create their own solutions. Originally from the Chicago suburbs, Hannah has been a C-U resident now for over 20 years.

The future of work is hard to predict, the one thing we know for sure is that it will be changing, fast. Powerful forces are trying to ensure these coming changes of automation and increased globalization benefit the financial elite at the expense of the world-wide working class. While the challenges ahead are uncharted, we do have a powerful tool available to us that have worked in the past through times of great worker upheaval: worker co-ops.

In Illinois, we have a little-known history of worker cooperatives, which are business enterprises owned by the workers, each having an equal stake and vote in the business. While we do know that hundreds, possibly thousands, of worker-owned cooperatives were organized during the early US labor movement in the 1880s, we have little record of their existence in this state.

Many states started putting cooperative business statutes on their books in the early 1900s that dictated what kinds of cooperatively owned businesses could form and under what guidelines. These laws were created state by state, each one different. The Illinois Cooperative Act of 1918, formulated in the early years of the last century, was still on the books, unchanged, until 2016. It had little to recommend itself to forming a worker cooperative, and much to hinder it, and so dampened the development of worker co-ops for many decades in this state.

In 2015, a working group was formed to change the law. “One of the concerns people had was that the existing law did not allow service-based worker co-ops to form under the Co-operatives Act,” says Rebecca Osland, Policy Associate at the Illinois Stewardship Alliance (ISA). Osland formed and headed up the working group that studied the law and how to best change it. “This was a fairly simple fix to the IL statute, and so in 2016, Illinois Stewardship Alliance worked with State Rep. Will Guzzardi and State Rep. Anna Moeller to open the Co-operatives Act to all kinds of business. Previously, the law was restricted to grocery and farming type co-ops, and manufactures of items, such as flour, meal, boots, shoes, and apparel. The 2016 legislation scratched out these specific business types, and simply allowed one type of co-op to be any business operated by its shareholders—worker co-ops!”

While Osland’s organization’s mission is to cultivate sustainable local farm and food systems in Illinois, ISA felt strongly about taking up the work to amend the IL statute to make it easier to form worker co-ops in the state, because of the potential impact of worker owned co-ops on the food system. “We took an interest in making it possible for worker co-ops to form along the local food supply chain, though the new law we helped move forward is not limited to these types of businesses.” While the changes proposed to the Cooperatives Act did pass and go into place in 2016, so far the impact on the worker co-op movement in Illinois is hard to gauge. It turns out there are strong reasons why a group of workers forming or taking over a business might not want to form under the Cooperative Act in Illinois. “Here’s the key: workers in a corporation are presumed to be employees, or at least it’s a big grey area. And there are many burdensome requirements of employment laws,” explains Sarah Kaplan, an Illinois attorney who specializes in cooperative law. Kaplan currently recommends that workers forming a business they intend to run in a cooperative manner not use the IL cooperative statute, but instead form as an LLC so the workers can be treated under the law as the owners rather than employees of the business, which the Illinois Cooperative Act still does not allow.

The legal bramble matters, and likely can be pointed to as one reason the worker co-op movement in Illinois is still “nascent, but it is growing,” according to Brian Van Slyke, worker-owner at The TESA Collective, a worker cooperative that creates programs and tools for social and economic change. When asked about the growth of the worker co-op movement in Illinois, Van Slyke shares, “I believe I hear about new worker co-ops popping up every couple of months, most specifically in Chicago, where I live.” But while worker co-ops are popping up now in at least the Chicagoland area, Van Slykes says the laws still need addressing to make Illinois conducive to worker co-ops. “There’s actually a push to get legislation passed in Illinois that would make incorporating a new business as a worker co-op easier, which could help the movement boom—but that effort has hit several roadblocks. Also, there’s been efforts in the past to start a worker cooperative network in Chicago that hasn’t quite gained enough traction.” Van Slykes sees positive signs on the horizon, though, for the movement, as organizations like Democracy at Work, a non-profit that advocates for worker cooperatives and democratic workplaces, come forward to support worker co-op organizing in the Chicago region. Kaplan also sees growth on the horizon for the Illinois worker co-op movement, and hopes to take part in helping to make it happen. “The Sustainable Economies Law Center and some partners have created something called Worker Co-op Academy. I’ve been thinking of offering that in Chicago, and hope to take action on that in the near future.”

Outside of Chicagoland there is as yet little stirring of the worker co-op movement in Illinois, but certainly just as much need for worker empowerment. Both in Chicago and nationally, there are trends in the types of businesses that tend to organize as worker cooperatives and they may be a good place for those in C-U to begin the discussion of worker empowerment through worker cooperative formation. “I’ve seen a lot of worker co-ops become established in industries that typically take advantage of low wage workers and freelancers. Two of the biggest examples, I think, are tech collectives (like companies that build websites) as well as coffee shops,” shares Van Slykes. “Worker cooperatives give employees access to a kind of control, stability, and self-determination they normally don’t have in traditionally exploitative industries.” The TESA Collective, Van Slykes’ organization, has also created a number of resources for groups and communities to use to explore how to start worker cooperatives. They offer a free documentary, Own the Change, about starting worker cooperatives, as well as other educational tools.

When asked if ISA could take a role in educating on and supporting the worker co-op movement in the rest of Illinois, Osland was open to the idea, but clear the call to do so would have to come from their members and communities they serve. “There seems to be a lot of interest around the country in figuring out how to remove additional barriers to make it easier for cooperatives to form. Those who are on the ground working to launch cooperatives should schedule meetings with state and federal elected officials and talk with them in their districts about the value of cooperatives and the barriers that they are hitting. Organizations such as Illinois Stewardship Alliance may be able to help, but we rely on our members’ and partners’ participation and input so that we can maximize the impact of our resources and staff. Working together, we can strengthen our local economies and communities.”

About Jacqueline Hannah

Jacqueline Hannah is the general manager of Common Ground cooperative.